pcc treasurer's roadshow
TRANSCRIPT
PCC Treasurer’s Roadshow
December 2016
SORP 2015
Parish accounts Guide - Annual reports
Receipts & Payments accounting
Wells 1 Dec
Taunton 7 Dec
Bath 13 Dec
Roadshow outline
Introduction
SORP 2016 (FRS 102)
Parish accounts Guide and Annual reports
Receipts and payments accounts
Charity SORP update Ed Marsh FCA DChA
Charity Development Director, Burton Sweet
Year end reporting • Accountability – at the heart of what it is to be a
charity
• A chance to tell the story
Basis of preparation • Charities can choose to prepare receipts and
payments accounts where gross income is less than £250,000.
• Charities must prepare accounts on an accruals basis and in accordance with the SORP if they have gross income greater than £250,000.
Receipts and Payments • No statutory format (SORP doesn’t cover it)
• Usually consist of: • Receipts and payments statement
• Statement (list) of assets and liabilities
• Trustees’ annual report
• Are they helpful?
Accruals basis • Must follow Charities Statement of ‘Recommended’
Practice
• Always consist of: • Statement of Financial Activities (SoFA) • Balance sheet • Detailed notes and disclosures • Trustees’ Annual report • (Charities with income >£500k must also include a statement
of cashflows)
Charities SORP • SORP 2016 (FRS102)
• For accounting periods beginning on or after 1 January 2016 (i.e. 31 December 2016 year ends)
• FRSSE SORP no longer available
• But some small charity (<£500k income) exemptions exist
Read the SORP here: www.charitysorp.org
Statement of Financial Activities
• Comparatives now needed for each fund column
• Governance costs relegated to the notes
• Investment gains and losses now form part of income and expenditure
• New ‘Plain English’ headings
Income from: Donations and legacies (donations, legacies, some
grants, gift aid relief from HMRC, Gifts in kind)
Charitable activities (e.g. Fee charges, admissions)
Other trading activities (e.g. charity shops, rent of premises)
Investments (e.g. bank interest, dividend income, charitable loan interest, NOT gains)
Other Income (e.g. profit on disposal
insurance payout)
Expenditure on: Raising Funds e.g.
•Fundraising activities/events/appeals
•Non-charitable trading
•Charity shop costs (where shop exists principally to raise funds)
•Finance costs (e.g. overdraft/loan)
•Investment management costs
•Allocated support costs
Charitable activities (with allocated support costs, including governance costs)
Other expenditure
Accounting policies • “The charity is a public benefit entity”
• Impact of adopting FRS102 SORP on prior year
• Statement about going concern
Changes to ‘numbers’ • Legacies
• Gifts in Kind
• Employee entitlements outstanding (if material)
• Discounting of long term liabilities
Disclosure changes
“Key management” • Disclosure of aggregate employment benefits to key
management personnel
• How might this be relevant to churches? Who are the key management personnel?
• NB Nil disclosure required
Donations • Aggregate disclosure of the total amount of donations
from Trustees or related parties.
• Includes Gift Aid
• Related parties • includes Trustees and key management and their close
family members plus entities they control.
• How will this information be obtained?
Other disclosures • Staff numbers by average headcount
• Aggregate value of Trustee expenses paid, waived (where material) and settled directly
• Separate disclosure of redundancy and termination payments
Trustees’ report • “Fair, balanced and understandable review”
• Disclosure of principal risks and how managed (not compulsory for small charities)
• Expanded emphasis on reserves reporting
Reserves - Why the fuss? • Reserves are an asset to be maximised managed
• Confidence about financial management, charity ‘resilience’ and funding needs
• What do stakeholders want to see?
The funds of a charity
What are ‘free’ reserves? Start with level of Unrestricted funds.
Subtract:
• Tangible Fixed assets held for charity use
• Programme related investments
• Designated funds
Reserves reporting Annual report requirements:
• A statement of policy on reserves (or why there isn’t one)
• Level of reserves held and why they are held
• Amount and purpose of any designated funds
• Where designated funds set aside for future expenditure, the likely timing of their use
Reserves reporting Charities ‘should’ also:
• Show calculation of free reserves
• Compare the actual level with the target level/range
• Explain what steps are being taken to bring the actual level in line with the target
Questions?
Ed Marsh FCA DChA
Charity Development Director, Burton Sweet
www.burton-sweet.co.uk/charity
Charity SORP update Ed Marsh FCA DChA
Charity Development Director, Burton Sweet
Session 2
PCC Accountability
Annual reports
Year end procedures
PCC Accountability: The Charities Act
2011 and the PCC - 5th edition
Preliminary pre-publication pdf version available online http://www.parishresources.org.uk/resources-for-treasurers/accounting-and-reporting/
Final online version available from February.
Print version available to order from Church House
publishing from February https://www.chpublishing.co.uk/category/christian-books/legal-and-reference-1413
PCC Accountability- quick tour Introduction and Legal overview
Principles of Trust Funds – fund accounting
The Annual report
Receipts and Payments accounting
Accruals accounting
Moving between R&P and accruals accounting
Consolidation
Independent Examination
How to write a great annual report
Follow the 10 required headings
Use it as an opportunity to report & celebrate what’s been happening
and future plans
Remember this is what brings the figures to life
Ask other members of the PCC to contribute
DO
DON’T
Include “local politics”
Include reports from non-PCC groups – they can be separately
reported to the APCM
10 key headings Aim and Purposes
Objectives and Activities
Achievements and performance
Financial review
Reserves policy Funds held as custodian trustee
Plans for future periods
Risk Management
Structure , Governance and Management
Administrative information
Pro-forma report
R&P Report Chapter 5 page 50
Accruals Report Chapter 8 page 84
Year end accounts reminders
To help you ensure your year end process is completed:
Download our checklist from http://www.bathandwells.org.uk/supporting-parishes/finances/for-treasurers/accounting-returns/
Complete/submit both Annual report & Accounts AND
Finance Return (online if possible)
Prepare one set of accounts for each parish:
Thresholds apply to total income of the parish
Single annual report
Single SOFA/ BS if accruals accounting
Session 2
PCC Accountability
Annual reports
Year end procedures
RECEIPTS AND PAYMENTS
ACCOUNTS
• Accruals or Receipts and Payments (R&P) Accounts?
• Recommendations from the Parish Accounting Guide (PAG)
• Moving from Accruals accounts to Receipts and Payments accounting
Receipts and Payments or Accruals?
Threshold >£250,000 for compulsory accruals
Below that threshold, consider:
Skills / knowledge required
Cost of accountancy / independent examination
Users of accounts…management accounts or statutory?
Statutory (year end) accounts sent to the DBF
Must be fully accruals or fully Receipts & Payments– not a
hybrid!
Recommendations from the PAG
No prescribed format under the SORP, but…
Standard headings are recommended for recording
receipts and payments (page 42)
Netting off receipts and payments is not allowed
R & P Statutory Accounts Components
Listed on Pp 43 – 47 of the Guide
Receipts & Payments Account – for all PCC funds
Statement of Assets and Liabilities (not Balance Sheet)
Notes to the Accounts (give more detail on accounting
policies, fund movements and items of Receipts and
Payments)
Independent Examiner’s Report
R & P Accounts Guidance
Accounts must agree with underlying records
Should be consistent with the Return of Parish Finance
Notes used to bring greater clarity / understanding
Registration with Charity Commission if receipts >
£100,000 (unless exceptionally – exemption must be
applied for and received)
Moving from Accruals to Receipts & Payments
Restate previous year figures
Reverse accruals and prepayments
Reconciliation of brought forward position
Map SOFA headings to R&P headings
Statement of Assets and Liabilities
Accounting policy note explaining the change (& ideally
reconciling the brought forward funds position)
Consider which notes are needed
Restating Previous Year Figures
Worked Example – see pp 102-103 & handout
Remove accruals and payments at beginning and end of
previous year
Brought forward funds = total of cash balances.
Include unreconciled cheques in the cash total
(i.e. cheques issued or received but payment not cleared the
account at the year end - these are not accruals)
Moving to Receipts and Payments
SOFA:
Consider using similar headings to the SORP ones for good
practice
More detail can be provided in Notes
Check reconciliation with total cash balances
Statement of Assets and Liabilities
Does not balance to anything – include a list of amounts owed
to and from the PCC and monetary amounts where available
Accounting Thresholds for Parishes
For receipts across all funds:
Receipts >£0 – Accounts must be filed with the DBF
>£250,000 – Accrual Accounts compulsory
>£500,000 – Small charity exemptions do not apply (implies compulsory cash flow statements, more specific details on Risks and
Reserve Policy required etc).
>£1m– Audit threshold (or >£250k receipts and >£3.26m net assets)
How can we support you?
Training –New Treasurers; Cashbook; Roadshows
Treasurer’s newsletter
Regular updates to the Finance News section of the
diocesan website and online Handbook
“Treasurers Learning Network” Luke 14-28 Forum
- JOIN TODAY
Telephone /email support for diocesan cashbook and
general queries
Thank you!
For giving up your time to come today
For all you do throughout the year managing the finances of your
parishes
For working in partnership with us ensuring Parish Share
contributions are made regularly and promptly- so we can provide
stipends and houses for the parochial clergy.
For all the “behind the scenes” activities - planning new projects,
reading the gas meters, banking the Sunday Schools “penny line”,
sorting out the funeral fees, attending PCC meetings………………
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Notes
Notes